Bitcoin preferred stocks STRC and SATA plunge hard! Strive CEO quickly puts out the fire: it’s leverage liquidation, not credit deterioration

Asset Management Firm Strive CEO Matt Cole posts saying today is the hardest day in digital credit history. Strategy's preferred stock STRC briefly dropped to $82.5 during trading, while Strive's own SATA fell from near par value to around $90 before stabilizing with buy orders. But he emphasizes, this is a leverage liquidation, not a deterioration of underlying credit quality; the issuer's creditworthiness remains solid, with dividend reserves intact.
(Background: CryptoQuant analyst: If Strategy sells coins + STRC loses its peg, it faces a death spiral risk)
(Additional context: Bitcoin downturn, Strategy preferred stock at an 8% discount! Three key reasons why STRC is approaching a historic low)

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• "Leverage liquidation" is not the same as "credit event"
• Issuer's credit remains stable, buy orders emerge at lows
• He is more optimistic

Summary Highlights

• Strive CEO Matt Cole states today was the most difficult day in digital credit history, with STRC briefly dropping to $82.5
• Matt Cole characterizes this as a leverage liquidation event, not a credit deterioration, with issuer dividend reserves full and credit quality stable
• Both STRC and SATA showed significant buy orders at the lows during trading, quickly recovering, indicating real demand at lower prices

Asset management firm Strive CEO Matt Cole posted that today was the most difficult day in digital credit history. During trading, Strategy's preferred stock STRC plunged to a low of $82.5 before rebounding sharply, while Strive's SATA fell from near par value to around $90 before bouncing back, leaving many investors with a tough trading day.

Digital credit refers to a group of "Bitcoin treasury companies" that issue preferred stocks or fixed-income instruments backed by Bitcoin reserves—Strategy and Strive are key players.

"Leverage liquidation" is not the same as "credit event"

Matt Cole breaks down the market's perspective. He says that when investors find an asset with high yields, relatively low volatility, and strong underlying credit features, they often leverage borrowings to amplify returns. The problem is, this strategy feels great in good times but painful in bad times.

• Investors borrow to buy high-yield assets, leverage amplifies gains
• When the market reverses, forced selling begins
• Margin calls trigger more sell-offs, creating a loop
• Selling disconnects from fundamentals, driven instead by balance sheet constraints

In plain language, it’s not that these assets have deteriorated, but that margin calls force liquidations. The selling pressure causes prices to fall away from their fair levels. Matt Cole emphasizes, this is different from a deterioration in the issuer’s credit quality.

A liquidation event is not the same as a credit event. Today's price swings do not change my long-term confidence in digital credit; in fact, they reinforce my view.

Issuer's credit remains stable, buy orders emerge at lows

Regarding the biggest concern—"Will they be able to pay dividends?"—Matt Cole says no. He states that Strive’s dividend reserves remain full, the company is not under pressure, and it can still meet its obligations and continue its strategic plans. He also points out that both STRC and SATA showed clear buy orders near the lows and recovered quickly, indicating real demand at lower prices.

This context is important because STRC has been under pressure recently. This perpetual preferred stock issued by Strategy, with a $100 face value, fell below par and approached its all-time low since listing in June. The market worries about dividend coverage and has shifted funds toward higher-yield competitors, notably Strive’s SATA. Notably, since June 16, SATA became the first U.S. capital market security to pay daily cash dividends, with an annualized yield of about 13%, paid daily rather than monthly.

Higher-yield assets attracted funds away, first hitting the head of the market. That’s why Matt Cole emphasizes separating "funds moving and leverage being liquidated" from "company fundamentals deteriorating"—it’s urgent to clarify the distinction before it’s too late.

He is more optimistic

Matt Cole concludes that today’s volatility not only did not shake his confidence but actually confirmed his judgment. He believes digital credit is evolving into a new category of financial instruments, destined to go through a growth pain period, just like other mature fixed-income markets have experienced.

This is not investment advice; please do your own research and judgment.

Frequently Asked Questions

What is STRC? Why did it fall below par?

STRC is a perpetual preferred stock issued by Strategy (formerly MicroStrategy), with a $100 face value and an 11.5% annual dividend yield. Recently, due to Bitcoin pressure, market concerns about dividend coverage, and a shift of funds to higher-yield competitors like SATA, it briefly fell below par and approached its all-time low since listing in June.

What’s the difference between leverage liquidation and a credit event?

Leverage liquidation refers to forced unwinding of leveraged positions, causing chain selling and price drops unrelated to fundamentals; a credit event is when the issuer truly cannot meet its obligations. Strive CEO Matt Cole emphasizes that the recent sharp declines in STRC and SATA are due to the former, with the issuer’s credit quality and dividend reserves still intact.